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Regulators: Beware of oil spill investment scams

Chavon Sutton, staff reporter


NEW YORK (CNNMoney.com) -- Investment regulators issued an alert Thursday warning against stock scams that promise profits from the Gulf of Mexico oil spill cleanup.

The Securities Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) said that scams are popping up that promise financial gains from investments in companies that claim to be involved in oil cleanup.

A statement from the SEC said it suspended trading in shares of Huntington Beach, Calif.-based ACT Clean Technologies on Tuesday because of questions about the accuracy of statements it made about its involvement in British Petroleum's (BP) cleanup efforts.

According to the SEC, ACT Clean Technologies claimed that BP was interested in using a so-called oil fluidizer technology, which is licensed to the company, for use in its cleanup operations. It also allegedly claimed that the oil fluidizers were effective.

"While many of the companies touting their role in the cleanup may be legitimate, others could be bogus operations that are only looking to clean out unsuspecting investors," the regulators said in a prepared statement.

In recent weeks, British Petroleum estimated that costs to clean up the Gulf oil slick have exceeded $350 million, or over $16 million per day, since the April 20 explosion that sank BP's Deepwater Horizon drilling rig 40 miles off the coast of Louisiana, leaving 11 workers missing and presumed dead.

On Wednesday, BP began its "top kill" operation, which involves pumping 50,000 pounds of heavy liquid into the leak to stop oil flow.

The SEC and FINRA said that the long-term outlook for cleanup is uncertain and warned investors to remain on alert.

The regulators said to be on watch for companies that issue press releases or send unsolicited faxes and emails that, among other things, claim to have products that are effective in remediating oil spills, mention contracts with BP, and predict rapid, exponential sales growth.

Investors can go to www.sec.gov/complaint or www.finra.org/complaint, if they are suspicious of a potential investment. The websites also link to other resources that could help investors to avoid these scams.  To top of page

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